Do you want to receive your own copy of "Gold - The Weekly
Global Perspective" [excerpts from the FULL version ] - Send your e-mail
address to: gold-authenticmoney@iafrica.com

Excepts from the "Global Watch - The Gold Forecaster":

Gold's Independence from Currencies - Why will gold rise now?Many
continue to be puzzled by the moves in the gold price both in Euros and in
the U.S. $. And the price has prompted many to turn to the formulae they usually
rely on to look at the gold price. Some have recognised that gold has moved
into a separate category of its own, but many just cannot get past their
own gold formulae, such as 'gold moves in an opposite direction to the
U.S.$'. Here is an example of an authoritative U.S. definition of the gold
price. Gold will rise if:

The expected rate of inflation is greater than the expected short-term
interest rate cost of holding it. If these expectations are realized, the
nominal price of gold will rise by an amount greater than the forgone interest
income.

The currency in which the gold is priced weakens. If each dollar becomes
worth less, it will take more of them to claim a given quantity of gold,
and the nominal price will rise.

Please
note that the writer, when referring to the gold price actually meant the U.S.
$ gold price. But Gold is bought in Rupees, in € and in other currencies
too. In each nation where these currencies are the local currency, each market
participant assesses its value in terms of that currency. If it rises in Rupees,
buyers wait for it to fall, if it fall in Rupees, it presents a buying opportunity.
They are not guided by the U.S.$ Gold price.

What is of critical importance is that the gold price has risen in the €,
something it has not done significantly for years. Why, because confidence
in the € has stumbled. The way forward for the € does
not look good, so gold to Europeans is suddenly attractive. They are not particularly
concerned with Gold's performance on the U.S. $.

The structural change is that in each currency, gold will be assessed and
not with reference to the $! This is why the global approach to the gold market
is the one that will understand the future of gold, not a parochial one.

This approach should begin with an assessment of each "Gold related" country's
importance to the gold market. Is the U.S. the most important or even the dominant
gold market? No, it is a good part of it, but not the part that defines the
price. So why should the $ be the definer of the gold price. If a European
buys gold because of the weakness of the €, he may pay in U.S. $ but
he may pay in €, but he is driven to do so by the performance of
the € not the $!

In the above analysis by the U.S. writer, he is right insofar as a U.S. citizen
buys gold, but will fail to understand the gold price itself with these measures
of influence on gold.This approach will prove to be the only professional one, from now on, or
the ability to profit fully will be compromised. We hope we can be of assistance
to you in this?

Interest rates and the oil price
There is no doubt that rising oil prices produces inflation, as the increased
costs to companies are passed on through to clients and customers in a 'ripple'
effect. Many nations want to control this by pushing interest rates up, lowering
the market's ability to carry these higher prices. But oil price rises also
act like taxation and pull money out of the consumers pockets. Add this to
higher interest rates and the effect on the consumer is to discourage spending.
This is where recessions come from.

You can be quite sure that the last thing the Administration wants now is
falling growtn and a recession. When this starts to happen, interest rate rises
have to stop. With interest rate hikes carefully planned, not only on the present
scene, but on the near term future, the Fed must have its eyes carefully focussed
on the oil market.

Greenspan and the Fed have acknowledged the damaging efffect recent high oil
prices have had on growth, so are fully aware that a breakout of the oil price
over $60 and holding there will not simply trim growth, but sag consumer confidence.

A halt to interest rate hikes and even a dropping of these rates comes onto
our horizons then. So while we still expect a ¼ point rise in the Fed
Funds rate, it could be 'cancelled', should oil prices continue to rise!

India - The Monsoon Progress report and the past year for India.
[With Thanks to Daman Prakash]

Monsoon
The monsoon is so far erratic with affected areas suffering a very unusual
hot spell. So far this year Kerala state has received only 58% of its average
rainfall by comparison with the average for the southwest monsoon with only
(only!) 12.9 cm of rainfall in the past fortnight, this against an average
of 31 cm. Over India as a whole, the monsoon so far is 52% below normal.

The past year

In 2004, (Until July 2004), Gold Imports looked like reaching historic
peaks. During this period, Letters of Credit of 360 days on Imports gave
Indians an arbitrage advantage as high as 3 to 4%. ( Indian deposit rates
wre 5.5% whereas LIBOR for U.S. $ was 1.25 to 1.75%). Thus while international
prices were high Indian selling rates were 3% lower. Then (With effect from
9th July 2004, the Reserve Bank of India, destroyed this scheme by reducing
the Letters of Credit time limit from 360 days to 91 days. This tightened
the Rupee/$ forward by charging 1.5%, so reducing deposit rates from 5.5%
to 5%. The scheme was virtually eliminated with U.S. Fed Funds rates rising
from 1% to the present 3.25%.

The Indian Rupee appreciated during that time by [to Indians] a huge 5%
to 6% ( From Rs. 46 per dollar to Rs. 43 per dollar) mitigating the dollar
based price rises in Gold.

The R.B.I. didn't allow commercial banks to offer bank loans for the purchase
of Gold for almost four decades. Then in 2004 such loans were permitted by
the R.B.I. and offered by the banks. As a result, customers can borrow to
buy Gold from the Banks. Banks are also aggressively marketing personal loans
to consumers to buy gold as they at last feel that such loans are secure.

The increase in the gold price promoted good levels of gold lending by
Government owned Banks and institutions. Such
loans are now available against the security. Thus Indians, particularly
Jewellers took advantage of the new scheme and took huge gold loans to increase
their inventory. The international Gold loan rates charged here are as low
as 1.75% to 3% per annum compared to bank deposit rate of 5.5% and bank advances
rates of 8 to 10%. Further all immovable properties can now serve as collateral,
which has helped jewellers to increase their stock. Large amounts of gold
were imported under this loan scheme in 2004 and continued to be so even
as late as February 2005 and April 2005, when Gold prices fell from their
highs. Gold for lending continues to be imported even now.

This is why the underlying demand for gold in India remains strong, even with
prices hitting record levels in Rupee terms during last year. Jewellery and
investment demand resulted in Indian imports of 586 tonnes last year (source:
GFMS Ltd) while jewellery demand itself was estimated at 518 tonnes, or roughly
20% of the world overall jewellery consumption. When coins and bars are taken
into account, India accounted for just fewer than 18% of gold demand last year.

The Global view is the only professional approach!
This last week has seen the € price of gold show more life than
it has done in the last few years. It has broken up and out of its € price
ceiling and has clearly broken away from the €. This prompted the
following questions: -

Are Europeans a more currency sensitive people and one who are very
quick to turn to gold?

Has Gold risen in U.S.$, or has the U.S.$ fallen in terms of gold as
is the case with the €?

Is the rise a reflection of the change in the pricing of gold?

Is Gold to now be seen as a 'measure' of currencies themselves?

Are we seeing a significant structural change in the gold market?

Or is the present gold price rise a consequence of demand and supply?

Is Gold is an effective counter to swings in all currencies [not just
the $]".

Through our global view of gold, we explain the gold price in different
gold-important currencies from both a fundamental and a Technical point of
view.

"Global Watch: The Gold Forecaster" covers the global gold market.
It specializes in Central Bank Sales and details, the Indian Bullion market
[supported by a leading Indian Bullion professional], the South African markets
[+ Gold shares shares] plus the currencies of gold producers [ Euro, U.S. $,
Yen, C$, A$, and the South African Rand]. Its aim is to synthesise all the
influential gold price factors across the globe, so as to truly understand
the global reasons behind the gold price.FIND OUT MORE

Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or the
solicitation of an offer to purchase or subscribe for any investment. Gold-Authentic
Money / Julian D. W. Phillips, have based this document on information obtained
from sources it believes to be reliable but which it has not independently
verified; Gold-Authentic Money / Julian D. W. Phillips make no guarantee,
representation or warranty and accepts no responsibility or liability as
to its accuracy or completeness. Expressions of opinion are those of Gold-Authentic
Money / Julian D. W. Phillips only and are subject to change without notice.

Gold-Authentic Money / Julian D. W. Phillips assume no warranty, liability
or guarantee for the current relevance, correctness or completeness of any
information provided within this Report and will not be held liable for the
consequence of reliance upon any opinion or statement contained herein or any
omission. Furthermore, we assume no liability for any direct or indirect loss
or damage or, in particular, for lost profit which you may incur as a result
of the use and existence of the information provided within this Report.

You should be aware that the Internet is not a completely reliable transmission
medium. Neither Gold-Authentic Money / Julian D.W. Phillips nor any of our
associates accept any liability for any loss or damage, including without limitation
loss of profit, which may arise directly or indirectly from your inability
to access the website for any reason or for any delay in or failure of the
transmission or the receipt of any instructions or notification sent through
this website. The content of this website is the property of Gold-Authentic
Money or its licensors and is protected by copyright and other intellectual
property laws. You agree not to reproduce, re-transmit or distribute the contents
herein.